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The recession is here (and has been since last December). It's going to hang around for a while longer at least. And layoffs and unemployment are almost certainly going to continue to increase right through election day, which is bad news for the people who will lose their jobs, but at least has the silver lining that it will increase the chances of Democrats doing very well indeed this November.
That being said, like seeing the green shoot of a crocus popping up above the ground at the end of January, I am seeing the first nascent signs that the economy may enter a period of respite by the end of this year, either growing very slowly or at least the pace of contraction slowing down to a crawl.
Increased 8% in July, 55% in a year. But I think the raw number tells the best story.
How many American families (not investors, not foreign investments or 2nd properties, rentals, bank owned, speculators) are actually owned in the United States?
What's the real percentage of US families, your typical working family, losing their home?
To most on this site, this isn't exactly news, as many have been claiming that the price of goods and such have been rising. But now the dead tree press is, in a sense, making it official.
US consumer prices rose by 0.8 per cent in July, twice as fast as expected, damping hopes that falling crude oil prices and the slowing consumer demand would rapidly ease inflationary pressures.
The surprise jump in the consumer price index on a monthly basis was accompanied by an annual increase of 5.6 per cent, which was more than forecast and the largest jump since 1991.
Meanwhile, core prices – excluding food and energy costs – rose by 0.3 per cent, which was also higher than expected, amid sharp increases in the prices of apparel, tobacco and public transportation.
The July consumer inflation data is out, and it's bad. Official CPI at 5.6% year-over-year is the worst since 1990. Food prices were up +.9% in a month. Energy prices up +1.9% in July.
Put this on top of the import inflation in excess of +20% reported a few days ago, and you have a bad situation. Americans' purchasing power hasn't nearly kept up with the goods and services they must buy. Simply put, Americans' standard of living has taken a big hit this year.
UPDATE: YoY wage growth is 3.4%, meaning wage earners have lost -2.2% in purchasing power. Here's the graph:
Notice that this is the first time that hourly earnings have actually decreased in the face of rising inflation.
But there is a silver lining; namely, the July CPI did not reflect the recent dramatic decline in Oil from $147/barrel. If Oil prices continue their decline, or just stabilize at $113-$120/barrel, then almost certainly July inflation is as bad as it gets in this cycle.
UPDATE: Here's a graph of the price of Oil vs. CPI for energy over the last 10 years. Notice that CPI energy always follows a turning point with no more than a one month lag:
The raw energy inflation data for May/June/July for the prior ten years' averages compared with 2008 is:
May +2.1%/+7.0%
June +2.3%/+7.2%
July -0.2%/+1.9%
In August, the average of the last ten years is +1.0%. A big decline in Oil will put a serious dent in the inflation rate.
The number of new households in the U.S. is increasing at a rate of about 800,000 a year, of which about a third are immigrants. Perhaps 150,000 of those are loosely classified as skilled. A double or tripling of this number would markedly accelerate the absorption of unsold housing inventory for sale — and hence help stabilize prices
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Lovely how it never seems to pass Greenspan's mind of the millions of US citizens being foreclosed on, declaring bankruptcy and maybe if they had stable jobs
and pay increases, that could solve the housing crisis!
Greenspan has long had the agenda to lower US workers, target the best paying jobs in the America, their wages.
With a dollop of IT companies in India being the best recruiters offering jobs to thousands of professionals are now more interested in offering overseas job opportunities. The main motive behind this is the shortage of skills and in turn better productivity.
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